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Amedisys (AMED) Soars 6.7%: Is Further Upside Left in the Stock?

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Amedisys (AMED - Free Report) shares soared 6.7% in the last trading session to close at $261.33. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 3.5% loss over the past four weeks.

The stock scored a strong price increase on raised investors’ optimism surrounding Amedisys’ major move to extend its reach in the home healthcare market by entering into an agreement to acquire Contessa Health. Post-closing, this prominent name in hospital-at-home and skilled nursing facility at-home services will operate as a wholly-owned division of Amedisys.

The acquisition deal adds higher acuity, home-based care to Amedisys’ current service offering, enabling Amedisys to create a premier home-based health system and significantly expand its total addressable market for in-home care services from $44 billion to $73 billion.

This home health care and hospice services provider is expected to post quarterly earnings of $1.43 per share in its upcoming report, which represents a year-over-year change of +6.7%. Revenues are expected to be $564.66 million, up 16.4% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Amedisys, the consensus EPS estimate for the quarter has been revised 0.8% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on AMED going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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